Making money from retail arbitrage on eBay and Amazon

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Making money from retail arbitrage on eBay and Amazon

Retail arbitrage is not a new method of making money online. Hundreds of third-party sellers on Amazon and eBay are using this technique to make a living. If you understand the ins and outs of the marketplace, it can even make you a millionaire.

How is it done? Is it legal? How it possible? These are probably a few questions about retail arbitrage that you have in mind.

First, let’s explain the concept of retail arbitrage. It’s a simple concept that even a grade school student can understand. In simple words, it means to buy low then sell high.

Walmart and Target are two major online retailers. You can purchase any product from them and sell it for a higher price on Amazon or eBay. That’s how you make a profit. If you want bigger earnings, you can take advantage of a clearance sale. When items are on sale, you can get them for a much lower price then you can sell them at a higher price. That’s how retail arbitrage works.

How is retail arbitrage done?

A classic example is buying and selling of branded bags such as Michael Kors and Kate Spade. Third-party sellers would wait for a big clearance sale such as Black Friday and buy several pieces of bags at a very low price then sell them at a price that is still lower than it's original price tag.

Why would customers buy from third-party sellers instead of from the actual Kate Spade store?

If you are serious about getting into retail arbitrage business, you have to understand the buyer psychology. Not all customers are price shoppers and looking for the cheapest products. Many of them are on eBay for convenience or because they are looking for items that are no longer available in the physical store.

How can big brands afford a clearance sale?

Most items that are being sold during a clearance sale are overstock meaning they don't have space anymore for new products so old stocks must go. In order to quickly sell these items, they will offer big discounts or buy one take one promo. Third-party sellers see this as an opportunity to earn profits.

Why don't big brands just distribute the overstock items to their other branches?

Sending those items to different store branches would mean spending on manpower and shipping. They're going to lose more money by choosing that option. It is easier more practical to just sell them at discounted prices.

How to take advantage of the FBA or Fulfilled by Amazon program

The process is quite simple and doable even if you have a low capital to start with. First, find a discounted product in-store. Second, find a listing on Amazon where similar brand or item are being sold at its original retail price. You will receive a custom mailing label from Amazon that you can attach to your item's box or packaging.

Third, your item will be stored in Amazon's warehouse and is now officially for sale under the brand name's official page. Finally, somebody buys the item and Amazon deposits your earnings in your bank account. They take care of the shipping process.

Conclusion

Retail arbitrage can make you thousands of dollars. The key is to find low priced items and sell them at a higher price. Waiting for clearance sale is something that you should consider.